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The new EU Package Travel Directive (PTD) will bring better, more efficient regulation as member states compete for travel companies to base themselves in their jurisdictions.
That is the claim by leading industry lawyer, Rhys Griffiths of Fieldfisher, who said there is a golden opportunity for the UK to be the “best regulator” in Europe.
The revised PTD was approved by the European Parliament in October and is due to be implemented by 2018.
It will bring most online sales of holidays within the definition of a package and create a new category of ‘linked travel arrangements’ to cover click-through sales between linked websites.
Companies facilitating linked arrangements will have to provide insolvency protection and information on the level of protection before the traveller agrees to pay.
The new PTD will require all member states to recognise the insolvency regimes of other EU countries. For example, the UK will not be able to impose its own rules on foreign travel companies selling to customers living here.
Speaking at a travel breakfast briefing last week, Griffiths said: “The new system will allow travel companies to decide where they want to be established for regulatory purposes. As long as they comply with the rules where they are established, that will cover them for the whole of Europe.
“The argument against is that this will lead to a ‘race to the bottom’ with regulators offering the cheapest and lightest rules to attract business into their country, whereas those with the most rigorous regimes will miss out.
“But I don’t think that’s going to happen. There will be regulator shopping but what will determine where companies go won’t be the cheapest place, it will be the place which has the best, most efficient and cost effective regulation.”
However, he accepted the new rules created a “serious practical issue” for travellers who book a holiday with a foreign travel company that goes bust.
“Will the traveller be expected to make contact with the authorities in the country where the company is based to be repatriated? How would they liaise with other foreign customers who have forward bookings?”